Why are similar businesses closely located to one another?
It might seem odd that similar businesses
such as shoemakers or butchers
would set up in the same location.
Wouldn't they just be competing with one another?
Even when a city's economy changes over time
the clustering of businesses remains common.
In London, for example, you can see the city's history
as a trading hub in street names such as Poultry,
Milk Street, and Bread Street.
These areas were named after the produce originally
sold there in the 16th century.
As large-scale manufacture and trade declined
in London, different industries took their place.
The deregulation of financial markets in 1986
turned parts of the city into finance districts
where banks and brokerage firms sprang up close together.
Clustering is common because it brings advantages.
Businesses can share costs, skills, and infrastructure.
They are likely to learn from one another.
And despite competition, they can pool their efforts
to seek support or investment.
Quantifying the exact benefits of clustering
well-educated employees have grown at a
faster rate than comparable cities with
The main drawback is that these benefits may only
apply to some people, while others are left out.
Without consistent planning and discussion between
those involved in building these clusters
isolated enclaves can start to form, complete with
dedicated transport and housing for skilled workers
The higher commercial rent can also
If such clusters are to truly benefit cities, they must
do more than provide jobs and visit local schools.
They must also think about how everyone experiences
the impact of a changing economy on their city.
For more on knowledge-based businesses and cities,